Effect of Climate and Geography on worldwide fine resolution economic activity

Abstract: Geography, including climatic factors, have long been considered potentially important elements in shaping socio-economic activities, alongside other determinants, such as institutions. Here we demonstrate that geography and climate satisfactorily explain worldwide economic activity as measured by the per capita Gross Cell Product (GCP-PC) at a fine geographical resolution, typically much higher than country average. A 1{\deg} by 1{\deg} GCP-PC dataset has been key for establishing and testing a direct relationship between 'local' geography/climate and GCP-PC. Not only have we tested the geography/climate hypothesis using many possible explanatory variables, importantly we have also predicted and reconstructed GCP-PC worldwide by retaining the most significant predictors. While this study confirms that latitude is the most important predictor for GCP-PC when taken in isolation, the accuracy of the GCP-PC prediction is greatly improved when other factors mainly related to variations in climatic variables, such as the variability in air pressure, rather than average climatic conditions as typically used, are considered. Implications of these findings include an improved understanding of why economically better-off societies are geographically placed where they are